Accountants include explicit costs as part of a firms costs, while economists include explicit and implicit costs. Explicit costs are ordinary business expenses that appear in the general ledger and have a direct impact on a company's profitability. Explicit costs have specific monetary values that are included in the income statement.
Wages, leasing payments, utilities, raw materials, and other direct costs are examples of explicit costs. Explicit expenses, tangible assets, and monetary interactions result in genuine firms opportunities. Because of the paper trail, explicit costs are simple to identify, document, and audit. Advertising, supplies, and purchased equipment are all instances of explicit expenditures.
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